Pakistan's Energy Issues:Success & Challenges
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PAKISTAN’S ENERGY ISSUES:SUCCESS & CHALLENGES Syed Akhtar Ali Research on Economy and Politics of Pakistan (REAPP) 1 Table of Contents PART I: GENERAL .............................................................................................................................. 12 1 INTRODUCTION ......................................................................................................................... 13 2 STRATEGIC DIRECTIONS IN ENERGY SECTOR ............................................................................... 39 3 WHAT IS THE RIGHT ENERGY SOURCE? ....................................................................................... 45 4 ACHIEVING UNIVERSAL ENERGY ACCESS IN PAKISTAN ................................................................ 54 5 ARE ENERGY PRICES HIGH IN PAKISTAN ...................................................................................... 60 6 ENERGY PRICES AND ECONOMICS IN PAKISTAN .......................................................................... 64 7 WHERE WILL OIL AND ENERGY PRICES GO? ................................................................................ 72 8 PRIORITIES IN CPEC .................................................................................................................... 75 9 THE CONUNDRUM OF SINGLE BID .............................................................................................. 78 PART II: RENEWABLE ENERGY, CONSERVATION AND CLIMATE CHANGE ............................................ 83 10 ARE WE CONSUMING ENERGY EFFICIENTLY? ............................................................................ 84 11 TOWARDS A REALISTIC CLIMATE CHANGE POLICY .................................................................... 88 12 COMPETITION IN RENEWABLE ENERGY .................................................................................... 91 13 BHASHA DAM: BEG, BORROW OR STEAL? ................................................................................ 98 14. HYDRO ROYALTY ...................................................................................................................... 104 PART III: OIL & GAS ........................................................................................................................ 108 15. RESTRUCTURING OIL AND GAS SECTOR ..................................................................................... 109 16. NATURAL GAS AND LNG DEMAND ............................................................................................ 113 17. NON-CONVENTIONAL GAS RESOURCES ..................................................................................... 122 18. ALTERNATIVE APPROACHES IN RLNG ........................................................................................ 127 19. ALTERNATIVE APPROACHES TO LPG AIR MIX PLANTS: SMALL SCALE LNG SUPPLY CHAIN ............ 131 20. LPG SUBSIDY SCHEME FOR AVERTING DEFORESTATION ............................................................. 139 21. LNG CONTROVERSY .................................................................................................................. 142 22. CURTAILING LOSSES IN GAS SECTOR ......................................................................................... 147 23. PROMOTING OIL & GAS PRODUCTION ...................................................................................... 151 24. ENFORCING ENVIRONMENTAL FUEL STANDARDS TO GET RID OF SMOG .................................... 153 PART IV: COAL ............................................................................................................................... 156 25. THE PROBLEMS AND PROSPECTS OF COAL? ............................................................................... 157 26. NEW THAR COAL TARIFF ........................................................................................................... 167 2 27. ENVIRONMENT AND COAL POWER ........................................................................................... 175 28. UNDERGROUND COAL GASIFICATION ....................................................................................... 180 29. INDUSTRIAL AND AGRICULTURAL USES OF THAR COAL .............................................................. 182 PART IV: ELECTRICITY ..................................................................................................................... 185 30. HOW MUCH ELECTRICITY DO WE NEED? ................................................................................... 186 31. LOAD SHEDDING AND TRANSPARENCY ..................................................................................... 198 32. DISCO PERFORMANCE .............................................................................................................. 203 33. REORGANIZATION OF THE POWER SECTOR ............................................................................... 210 34. FEDERALISM IN ELECTRICITY ..................................................................................................... 213 35. REVIVING PEPCO ...................................................................................................................... 221 36. REGULATORY REFORMS............................................................................................................ 223 37. ALTERNATIVE APPROACHES TO SMART METERING ................................................................... 229 38. CASA - A LIABILITY? .................................................................................................................. 232 39. NEW K-ELECTRIC TARIFF ........................................................................................................... 236 40. RELENDING CHARGES IN THE ENERGY SECTOR .......................................................................... 238 41. NUCLEAR POWER ..................................................................................................................... 240 42. DEMYSTIFYING NANDIPUR PROJECT CONTROVERSY .................................................................. 245 3 LIST OF TABLES Table 1 Energy Components Growth Rates (%p.a.) .................................................................................... 40 Table 2 Pakistan's Power Generation Mix 2015-16 .................................................................................... 41 Table 3 Electric Power Installed Capacity vs. Water Storage ...................................................................... 47 Table 4 Comparative parameters of Various Energy Sources .................................................................... 52 Table 5 Comparison of Electricity Access 2016 ........................................................................................... 54 Table 6 Health Effects of Hazardous Air Pollution ...................................................................................... 57 Table 7 Gasoline and Diesel Prices in Selected Countries (May 22-2017) .................................................. 60 Table 8 Comparative Electricity Tariffs in India and Pakistan (USc per kWh) ............................................. 62 Table 9 Gas & Electricity Prices for Household and Industry in Europe (2016-2017)................................. 63 Table 10 Comparative Fuel Cost in Electricity Production (Rs/kWh) .......................................................... 64 Table 11 Comparative Coal Prices............................................................................................................... 66 Table 12: Comparative Tariff: Thar vs. Imported Coal ................................................................................ 67 Table 13 Cost of Generation (COGE) of RLNG NGCC vs. Imported Coal ..................................................... 68 Table 14 LNG Supply Contracts and Prices ................................................................................................. 69 Table 15 Natural Gas Prices in Pakistan (USD/MMBtu) .............................................................................. 70 Table 16 Energy Prices Projections (2015-2040) at nominal and constant prices of 2015 in USD ............. 74 Table 17 Bilateral Project Loan Terms in South Asia .................................................................................. 82 Table 18 Comparative INDC Targets of Various Countries ......................................................................... 89 Table 19 Comparative Royalty Rates in Hydro sector in Various Countries ............................................. 105 Table 20 Local Oil and Gas Production Trend (2002-15) .......................................................................... 114 Table 21 Natural Gas Consumption (2002-2015) ..................................................................................... 116 Table 22 Natural Gas Consumption Forecast (2015-2025) ....................................................................... 117 Table 23 Natural Gas: Projected Demand and Supply (mmcfd) 2025 ...................................................... 120 Table 24 Small Scale LNG(SSLNG) perspective data and parameters ....................................................... 133 Table 25 Comparative LPG and HSD Prices (Whole Sale/Ex-Refinery) ..................................................... 134 Table 26: Proposed LPG Subsidy scheme-Major data and parameters .................................................... 141 Table 27: Comparative LNG Import Prices in Countries ..........................................................................